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At-will employees can’t sue for fraud as to promise of continued employment

In Sawyer v. E.I. du Pont de Nemours & Co.,No. 12-0626 (Tex. Apr. 25, 2014), defendant spun off a portion of its business into a wholly-owned subsidiary. Plaintiffs, former employees of defendant, allege that defendant, in an effort to encourage them to transfer to the newly-formed subsidiary, promised plaintiffs that it would not sell the subsidiary, even though, unbeknownst to plaintiffs, defendant was already in talks for such a sale. Shortly after plaintiffs accepted defendant’s offer, the subsidiary was sold and, as a result, plaintiffs’ compensation and benefits were reduced. Plaintiffs filed suit, alleging that defendant fraudulently induced them to terminate their employment and accept new employment with the subsidiary. The Fifth Circuit certified the following question to the Texas Supreme Court: may at-will employees bring fraud claims against their employers for loss of their employment. The Texas Supreme Court answered no. The court clarified that its holding did not mean that at-will employees can never sue for fraud. But, if the employer can avoid performance of a promise simply by exercising its right to terminate the at-will relationship, then the promise is illusory and it cannot support either an enforceable agreement or a claim for fraud.

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